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Building approvals up for past five months

ABS Building Approvals data for detached houses rose for the fifth consecutive month in November to reach the highest number of approvals since December 1999. Source: Timberbiz

“While HomeBuilder was the catalyst for improving consumer confidence in the housing market, the strength of detached building approvals is due to several factors including low interest rates,” HIA Economist Angela Lillicrap said.

Detached house approvals increased by 24.8% in the three months to November 2020 compared to the preceding three months and are 31.4% higher than the same time last year.

HIA New Home Sales data suggests that detached house building approvals will continue to be strong over the coming months. The extension of HomeBuilder at the end of November was not a factor in this month’s result but would see the strength in detached house approvals extend into 2021.

“The Northern Territory has seen the largest improvement over the last three months with detached house approvals more than double the same time last year. It is important to note that this improvement is from very low levels of activity a year ago,” Ms Lillicrap said.

“Western Australia follows closely behind with an increase of 89.1% in the three months to November compared to the same period last year. This is due to the pent-up demand for new housing in the state, combining with HomeBuilder and the state government stimulus measures,” she said.

But multi-unit approvals have not experienced the same boom that has been seen in the detached market and unit approvals remain 9.7% lower in the three months to November 2020 compared with the same time a year earlier.

Ms Lillicrap said that the multi-unit projects that gained approval in November probably began the planning and building approval process years ago.

“The apartment market is likely to be constrained going into 2021 due to slower population growth and a stronger preference for detached houses,” she said.

In seasonally adjusted terms, the number of detached dwelling approvals during the three months to November 2020 compared to the same time last year, saw the largest increase in Western Australia (+89.1%). They also increased in Queensland (+27.8%), New South Wales (+24.5%), Victoria (+24.3%), Tasmania (+22.7%), and South Australia (+18.7%). In original terms, they improved in the Northern Territory (+114.0%) and declined in the ACT (-25.9%).

The number of multi-unit approvals declined in Tasmania (-81.8%), South Australia (-51.0%), Queensland (-18.4 per cent), Victoria (-11.3 per cent and New South Wales (-3.4%). They increased in Western Australia (+111.5%). They declined in original terms in the ACT (-25.9%) and increased in the NT (+90.0%).